Press Release No. 03/190

Press Release: IMF Managing Director Horst Köhler's Statement at the Conclusion of a Visit to the Republic of Tajikistan

November 12, 2003

International Monetary Fund (IMF) Managing Director Horst Köhler made the following statement on November 11 in Dushanbe:

"It has been a pleasure to visit Tajikistan—my first as Managing Director of the IMF—and witness the economic opportunities and challenges facing the country. During this visit, I had the privilege of fruitful discussions with His Excellency President Emomali Rakhmonov and the government's economic reform team, as well as representatives of the diplomatic community and civil society.

"The growth of real GDP over the past several years has been impressive. Since 1996, we estimate that the average annual growth of GDP has been 7 percent. Inflation has declined considerably since 2000, and has been in the range of 12-15 percent for the past two three years. However, inflation remains too high and we urge the authorities to intensify their efforts in this area, as this, together with structural reforms, will create better conditions for growth, job creation and poverty reduction. I welcome, therefore, the recent restructuring of the National Bank of Tajikistan, which should strengthen the implementation of monetary policy.

"An important element in the strong growth of output in recent years has been a strong fiscal performance. The authorities have maintained an impressive degree of expenditure discipline and at the same time have been able to strengthen the collection of tax revenues. There is scope for improving the quality of public sector spending, and I welcome the authorities' commitment to increase expenditures for health and education as a share of GDP in the 2004 budget.

"The good growth performance is making an important contribution to poverty reduction, in line with the objectives of Tajikistan's Poverty Reduction Strategy Paper (PRSP). These efforts can be magnified by successful implementation of structural reform. I recognize that structural reform is one of the most challenging elements of the government's economic reform program, but it also has great potential for fostering growth, and reducing income inequalities and poverty. In this regard, I encourage the authorities to intensify their reform efforts, especially in the banking, energy, and agriculture sectors, and to promote private sector development.

"To develop the private sector necessarily means improving the business climate, which will require efforts to create a level playing field and reduce the serious problem of corruption. In this regard, we welcome the plans to increase the transparency of both fiscal and monetary policies and to enhance the operations of the State Financial Control Committee. This agency can play an important role in ensuring that public resources are used efficiently and for their intended purpose.

"Finally, like its neighbors, Tajikistan would benefit from stronger regional economic ties that could do much to promote growth, job creation and a rise in living standards. The Fund will work together with all the countries of the region to improve trade links.

"The IMF is supporting Tajikistan's efforts to achieve sustained growth and poverty reduction through a three-year US$90 million Poverty Reduction and Growth Facility (PRGF) program, approved in December 2002. Some US$22 million has so far been disbursed under the program. Continued progress with economic reforms will ensure Fund support in the future."